Saudi Arabia works on convincing Russian Federation to join oil cuts

AUSTRIA Opec President and Energy Minister of the UAE Suhail al Mazrouei opens the 175th Opec Conference in Vienna on Wednesday.—AFP

"We don't need permission from anyone to cut", he said.

Traders said oil prices were being weighed down by weak global financial markets, which saw stock markets tumble on Thursday.

OPEC agreed in principle to cut production during a meeting at its headquarters in Vienna, Austria on Thursday, two sources told Reuters.

Saudi Arabia has indicated a need for steep reductions in output from January, but it has come under pressure from US President Donald Trump, who has urged Riyadh to refrain from output cuts in order to keep oil prices low.

He tweeted Wednesday that "Hopefully OPEC will be keeping oil flows as is, not restricted". Crude prices have been falling since October because major producers _ including the USA _ are pumping oil at high rates and due to fears that weaker economic growth could dampen energy demand.

Concern over an emerging supply glut has decimated oil prices - West Texas Intermediate, the US benchmark, fell more than 2 percent to $51.56 per barrel on Thursday - but President Trump has pushed for cheaper oil, urging other countries to refrain from output cuts.

If Russia contributed around 250,000 barrels per day, the overall cut could exceed 1.3 million barrels per day.

The price of crude has fallen nearly a third since October but Trump has demanded OPEC make oil even cheaper by refraining from output cuts. "That is acceptable for most OPEC countries".

Russia President Vladimir Putin will decide on the country's contribution to global oil output. If Russia does agree a cut, it would take three to four months to fully implement it, he said.

International Brent crude oil futures were at $61.37 per barrel at 0240 GMT, down 71 cents, or 1.1 percent from their last close.

OPEC ministers reacted to Trump's intervention by telling him not to interfere.

The Saudi Arabian endorsement of moderate curbs comes amid reluctance of main ally Russian Federation to make substantial cuts, and pressure from the US President Donald Trump to push prices lower.

The US "is not in a position to tell us what to do", he added. But just like the USA is pursuing its own interests, one can not expect Saudi to do anything different - even despite the controversy surrounding the killing of journalist Jamal Khashoggi in Istanbul at the Saudi embassy.

The United States energy industry continued to soar to life under President Trump and the GOP-controlled Senate this week; becoming a "net exporter of oil" for the first time in over 75 years.

"They should know that OPEC is not part of their Secretary of Energy", said its minister Bijan Namdar Zanganeh. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States' vastly increased production of oil in recent years.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

Ideally, "the price would be better to stand at $60-70". The price of oil fell 22 per cent in November and was down again on Thursday amid speculation that OPEC's action might be too timid to support the market.

Hittle added that Wood Mackenzie's short-term outlook projects key OPEC producers - Saudi Arabia, United Arab Emirates and Kuwait - together with Russian Federation and Oman, will push through a moderate reduction in output in place through 2019. While Saudi Arabia, the group's biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal.

Qatar has been isolated by a group of countries led by Saudi Arabia since June 2017, in the worst political fallout between the energy-rich Gulf powers.

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